In any arena where an informational edge often equates to success, there is a considerable emphasis placed on gaining that edge. In some markets, such as binary options, that emphasis can be translated into a profitable endeavor. This is the basis on which binary options signals are founded.
Generally offered by third party companies, binary options signals are offered as a service to traders. They literally tell traders whether to place a call, a put, or to avoid a certain asset at a certain strike price altogether. High quality signal providers might be compared with well-known credit and equity ratings agencies such as Moody’s or Standard and Poor’s.
Whereas the aforementioned global powerhouses rate all types of financial instruments, signal providers take a much more specialized approach. They typically focus only on binary options, giving customers information in exchange for a paid subscription or one-time fee. Because binary options signal services are relatively new and widely available, there is a definite disparity in price depending on the provider. Subscriptions can range from well under $25 to well over $1000 per month. In essence, subscribers can account for their fees paid as fixed costs related to their trading.
Before doling out hefty sums of money for a signal service, binary options traders should have a good understanding of what they are. Most service providers send a set number of “alerts”, or snippets of information with trading recommendations, to their subscribers each day. Action on the information is not compulsory, and it is ultimately up to the trader him or herself on whether or not to pull the trigger based on the signal provider’s advice.
It’s important to note that, while usually better than 50%, signal providers are never right all of the time. Markets often move in mysterious and unexpected ways – making even the most thorough and accurate analysis utterly worthless every once in awhile. Still, many traders prefer to subscribe anyway to help them keep up with a wide scope of constantly changing information. With the tips, they are able to do their own analysis and make trades they’re fully confident in.
There is no magic bullet for making consistent profits trading binary options. The use of signals, however, does play a part in the success of many traders. In a market that can be so lucrative, there is certainly plenty of incentive to try and attain that informational edge through binary options signals.